What happened
Auto care specialist Monro (MNRO 3.69%) reported quarterly results that came in below expectations, and the company issued lackluster guidance about the current three months. Investors were not pleased, sending shares down 11.5% as of 11:12 a.m. ET.
So what
Monro operates more than 1,300 auto repair shops in 32 states under brands including Mr. Tire, Tire Warehouse, and Tire Barn. The company hit a speed bump in the fiscal fourth quarter, reporting earnings of $0.08 per share on revenue of $310.84 million. Analysts had been expecting $0.31 per share in earnings on sales of $313 million.
Sales were down year over year, but that is in part due to the divestiture of Monro's wholesale tire and distribution assets. Same-store sales were up 4.5% in the quarter.
The company said that macroeconomic pressures were hitting the business hard.
"Our profitability in the fourth quarter fell short of our expectations," CEO Mike Broderick said in a statement. "Our gross margin in the fourth quarter was impacted by continued labor cost pressures and continued customer trade downs to opening price point tires."
Now what
Things are not going to improve anytime soon. Monro forecast Q1 earnings to come in between $0.36 and $0.42 per share on revenue of $330 million to $335 million. Analysts had been expecting earnings of $0.42 per share on sales of $338 million.
Broderick said the company is taking steps to counter higher costs, including price adjustments and "reductions in non-productive labor costs."
Monro is also making some shareholder-friendly corporate governance moves, such as eliminating a preferred class of stock and making all directors subject to reelection annually.
Those are steps in the right direction, but it appears at least for now the business is going to need some time in the shop for repair. Investors are choosing not to wait around while that happens.